Morning, everyone. Ready to get after it. Kip, welcome. Thanks for being here. Kip Meintzer from Check Point. My pleasure. I'll throw it over to you just to do the safe harbor as we were just talking about. Yeah, quick safe harbor. I guess I'm the only one that does it any longer. But during the course of the presentation, there may be forward-looking statements made. As with all forward-looking statements, there's risks and uncertainties that could occur. If you'd like a comprehensive view of, or not exhaustive, but a comprehensive, check out our latest Form 20-F for all of the risk factors associated. You might also go to sleep pretty quick. With that, I'll throw it back to Eric, and we can proceed. All right. Cyber, Mythos, AI, driving a lot of excitement on an inflection of spend, at least in the investment community, and trying to discern if and when that happens. What is Kip's perspective or Check Point's perspective on the level of investment in cyber at a more macro level and when that might occur? I think what we saw this year was people robbing other areas of the budget to spend on AI. I think what you see right now is people getting ready for next year, doing their AOP. I know we are ourselves. I think that AOP for next year is going to include a lot of dedicated AI spend, probably a lot of it around AI security. Yeah. Because you need to put the cart before the horse. Yeah, which doesn't always happen, but. No. I think you saw a little of that happening over the last, I'd say the last 12 months, the end of last year, the beginning of, well- Yeah. where we are in this year. I think people figured out real quickly that without security, you're in a little heap of trouble. Yeah. I think even our frontier model makers discovered some of that. Yeah. Is that your perspective, just like it's more of a 2027 event, like when the budget cycle happens, and then that's when maybe security gets better funding? I think if you look at, for us, I think that was probably a big decision, why we decided to do our go-to-market changes this year- Yeah. instead of holding them off till next year. Probably resulted in a little bit of the challenges we've had this year because we decided- Yeah. to do it this year. Yeah. But it's for that purpose. We see 2027 as a standout AI year. Yeah. Yeah, it makes a ton of sense to be on firm footing when the budgets hopefully get better. Let's talk about 2Q earnings, just how things played out relative to your expectations. Obviously, we knew that you guys were, on the 1Q call, said that you had some go-to-market changes and you expected some disruption. But how did that play out from a demand perspective and a go-to-market execution in 2Q? I think it could've been better. Yeah. I think to put it in a very straightforward answer, I think it could've been better. I think we would've liked it to have been better, but it's behind us now. I think we've got a better handle on Q3, Q4. I think you can see that in the confidence we had in the guidance that we provided and the indications we're seeing out of the pipe. Things are going in the right direction for us. But it's nice to have 2Q behind us. Yeah. And then so just the evolution of the go-to-market change, can you just walk through that again, because we were talking about that last night at dinner, and it was helpful for me to just understand the last six months for context. So look, it's more about focusing on the big dollars in the market, the large customers, making sure that we're front and center of those folks. So those customers that are ours have more dedication from an account manager than they've had in the past. As for going after new logos, which is very important for us, we have hunters. Those hunters are on multi-year contracts, something we've never done in the past. We've given them enough ground to where they can go out, and they can penetrate the accounts they're looking to do. Without having the pressures of expectations of one year. Realizing this takes sometimes more than a year to accomplish in a large account. I think with that, and I think with all the changes, the overlays, I think that's the disruption that was there. We also culled through and continued to hire. We also talked about in the Q2 that we're looking to hire an additional 300 by the end of the year. It'll be about a net 150 when it is all said and done. We expect to hit 2027 on the ground and running. Right. Could there be a question here? On the one-year deal and being able to do multi-year deals, how big of an allotment could be on the sales reps excited about that? No, it is giving them more time to, yeah, it is giving them more time to go and build the relationships and establish the rapport and make the account happen rather than be in a rush. Think about when you are put under pressure, right? That type of deal, you really need to nurture it. Yeah. Giving them more than one calendar year to- Yeah. advance that. You don't want to hear the foot coming behind you, right? The steps coming behind you. Giving them plenty of time to develop the relationship and penetrate the account. And then just level set, just in terms of what you are anticipating in terms of incrementally in Q3, in terms of go-to-market changes, execution. I think Nadav called it the trough he expects in Q3. Just share what you are expecting in terms of incremental changes, if you are thinking about what you have handicapped in terms of thinking about guidance for Q3. When we were looking at Q3, we do view it as the trough, but I think the biggest aspect is the tough compares there, right? Right. The billings number and such. It is the optics of it that really makes it look like the trough. When we look out there, second half of the year, we have been telling you guys all year long that the pipeline is building, and Q4 definitely is looking like just a complete home run. Q3, we talked about having a couple big deals that may push and tried to bring that into everybody's attention. We will see. We are off and running in Q2. The first half of the year is behind us. Yep. We think brighter pastures in front of us. Yeah. The confidence in the Q4 and the ramp, it is obviously high seasonally relative to what you typically do in Q4. What is the visibility there, the confidence in terms of execution will be there? Or what the customer feedback might be to give you the confidence that like, "Hey, maybe not a Q3 event, but a Q4," we feel pretty good. I think it has to do with our reliance on now the sales force. I think we have got a better handle. Yeah. On their relationship with the customers. They have now been in there for about 2 quarters with their accounts. It's given us a much more secure feeling than what we had in the past quarter. Just more at a macro perspective, what's the sense on firewall demand in terms of there's price increases or supply chain, you're contending with other budgets, there's a refresh dynamic from COVID that could potentially be happening, and there's also AI data centers being built. There's just so many factors of moving pieces in the firewall market. Just what's your perspective on the puts and takes when it comes to overall firewall demand? I think there's definitely going to be an increase in traffic. Yeah. If people are going to be adopting AI at the levels that I think everyone anticipates, I think the traffic level is definitely going to increase, and I think the level of security is going to be a necessity. I think with our latest introduction of the AI Network Firewall, I think it puts a smack dab center. in a category that nobody else can address. Yeah. I think we're optimistic, and it's not something that you have to buy a new box to get. You can upgrade your current software on your current boxes. Then adopt the subscription. It'll be a higher price subscription than the prices that we've had on the previous. Yep. But it's an opportunity for someone to be able to address the threats of AI within their organization. Yeah. Do you think increased traffic from AI and agents, is that on the come, or do you think that's already happening in some accounts? I think in some accounts, it's probably already started. Yeah. I think it's going to be more widespread and probably accelerating in the coming year. Yeah. I think when people have a time to plan and budget, I think they do it with a purpose. I think what you saw this year, not much of it was done with purpose. I think people were experimenting. Yeah. The AI Network Firewall, it was big the way you positioned it, that it's different from what else is on the market in terms of AI solutions or other firewall solutions that are trying to achieve similar outcome. But how is the Check Point architecture different with the AI Network Firewall? With our firewall, you can prevent threats from the outside and the inside. You have the- East, west, north, south, you mean? Yeah. Yeah. You have the aspect of the DLP for apps. We have a greater amount than everybody else does, and I think that one's consistent across all the firewall providers. I think it's when you get down to the MCP server protections. Being able to capture shadow AI, things along those lines, where we're differentiated. I think we have a complete stack from an AI perspective, and it's something that everybody else either has to utilize a secondary technology to deliver, whether it be a virtual instance or something along that lines- Yeah. or they don't even have the capability at all within their products. Yeah. I think it puts us in a very differentiated spot right now. It's brand new, so we'll have to see how the adoption goes. It's available today, though. It is available today, yes. One more before I throw it to the question in the audience, but you can buy it, you can add the subscription to the existing box. Correct. If you upgrade the box- You also upgrade. You upgrade the box with the software. You have to be on the latest rev. Then that gives you the option to have the subscription. Or you can buy a brand new box that already has it on it. Yeah. Do you think this would lean someone towards upgrading, or you think it is kind of indifferent? I am not sure yet. Yeah. All right. I think it is too soon to tell. Yeah. Hopefully it does both. Yeah. Question here. Yeah. Do you think is that something that Check Point could address today or be interested in addressing in the future? Question for the recording, but the NPM supply chain attacks, is that something you're seeing? Is that something Check Point can address? When you're saying the supply chain, elaborate a little further. There's been supply chain attacks, people basically corrupting open source software, downloading these packages and running them on their machines, but they're corrupted. I don't know, Shai Hulud and some other ones out there. I don't know. Yeah. So I would have to say a little beyond my scope at this point. Yeah. I would love to be able to give you an answer, but I will tell you what you do is send me an email at kip@checkpoint.com and I will get it out of our technology side. Yeah. Then one other thing on hardware. With the inventory dynamics, pricing, what is the current temperature or feeling in terms of supply chain availability, the need to increase prices? Where do things stand at this point? I think Roy addressed it on the 2Q call. He said from a supply standpoint, we do not have any limitations or anything along that line. But he did say on a pricing level, he says, "If we do need, we will increase price. He says at this time, he hasn't indicated whether we will or will not. But given time, it's potential that we could add another. Yeah, and nothing's considered in guidance at this point incrementally? No. I wouldn't expect it to be a material amount. Yeah. Yeah. Okay. Just like we did the 5% surcharge in April. Right. Then it just depends if it comes out of discounting or not. Yeah. So. So let's talk beyond the firewall in terms of the subscriptions and some of the acquisitions you've done. But Nadav's obviously taken a different approach in terms of the platform strategy, Open Garden. Which is always what customers want. Without a doubt. Yeah. So it's the right strategy in terms of what customers want. So elaborate more on where you see the opportunity for Check Point to consolidate, where your swim lanes are that you think you have a right to consolidate and- So look, I think we're still a platform provider. Yeah. It's just that the approach we do take is an Open Garden. We're not forcing an issue, right? We're very open to it. But I think in the long run, a customer may decide to take more Check Point than less Check Point. When you look at the Open Garden, you have our CTEM product and our Veriti acquisition, where we have the virtual patching for over 70 of our competitors' products. This allows customers to have an environment that is capable as ours, right? As soon as we have the fix or as soon as we have the prevention, it's then available for everybody else within that environment. Sure. The goal is not to. At that point, our competitors are our partners. Because we have a common goal, and that is to make the customer that much more safer. Yeah. In the end, it is about the customer, it is about making their environment secure. I can imagine where down the road, when a customer sees this type of action or this approach, and also realizes that what is taking place is something they already have, they could actually eliminate others and not have to have that issue any longer. So it puts us in a unique position, and I think from a performance standpoint, down the road, there is potential, but until something like that happens, we are always going to take this Open Garden effect. Yeah. You mentioned virtual patching. Is that something you are doing? You are even providing that for infrastructure that is not yours? Yeah, it is Veriti. Yeah. You will remember we bought that last year, and that is part of the CTEM product. Right. Yeah. That seems like it could get a lot of interest going forward of like, people are struggling with patching. That is the big challenge. I would say this, our CTEM product is our fastest growing product right now. Yeah. That solution sells itself. Is that law of small numbers, or is that like there's something? It's not so small anymore. Yeah. Yeah. It's still small, but it's not that small. Yeah. Don't think of it as the millions. It's much more now. Really? Yeah. Wow. Do you think this is This seems squarely aligned with what Mythos is and Project Glasswing is, the risk that it presents, and CTEM's the solution for this. I think that's why we entered that market. I think it was timely. Yeah. I think we probably have one of the top products, if not the top product in the marketplace. On subscription rev, I wanted to ask you, I think this Howard point this quarter and the expectation going forward, we had the price increase as a tailwind from last year, both on the firewall- Last July, yeah. Yeah, and on the services, yeah, the pricing. We have had some recent M&A that is on the margin. Then you have some products that are scaling really well. You have Avanan still growing well, CTEM growing well. On the other hand, product obviously challenges here, so just wrap it all up and understand puts and takes to subscription revenue growth going forward. On subscription revenue, because of the pressure on the attached services, you probably see it flatten out before it takes off again. When you look at the unattached, that has the potential, probably in the not too distant future, to become 50% of that subscription line. Of course, that will depend on what happens with the AI Network Firewall, the subscription there. There is a lot of potential for that to contribute to the attach side. I think right now, we talked about it in, I think, the Q2 earnings about how you will see it slow down a little on the subscription, and then it should start to ramp back up in the fourth quarter, I believe is what. Yeah. Roy said. Yeah. From that standpoint, I think next year could be very fruitful. Depending on what the market dynamics are, but AI Network Firewall could have a nice contribution if it does take off. To attached? Yeah. Yes. What is unattached today, roughly? Unattached? Yeah. Somewhere around 30%+. Yeah. Yeah. Would SASE be attached or unattached? SASE is unattached. Unattached. That's part of that whole section. Yeah. You have SASE, CTEM, there's endpoint in there's Avanan, whole workspace. Yeah. And AI. Yeah. And then as on the topic of SASE, where are things now? Where do you expect it to- So- Be much more front-footed on the SASE conversation? Nadav called it out on the quarterly call. He said, "We're enterprise ready." Yeah. It's only going to continue to get better. It is enterprise ready, but we're continually working on it to make it better. We'll see what happens in the coming year. I think it's coming out, hopefully, in the coming year, it'll start to make a difference. The other thing on, where was I going to go with this? Let's talk M&A, just pace- Okay. of M&A of late. A lot of talk in just how is Nadav thinking about M&A going forward? He's been pretty vocal. We have the cash to do something larger. I think if you look at our approach, we're willing to do whatever it takes to get something that's larger. We don't force the issue, right? Yeah. It has to make sense. The reason why we've done so many small ones is because they were available, and they made sense. Yeah. As we find things that are larger in nature, we definitely have the appetite for it. Yeah. As I said, we're not going to force it. It's got to be something that makes sense. It makes us a better organization, in other words, our offering. Yeah. Time will tell. Core to the strategy, right? Look, everything's security, right? Yeah. Something that's larger is probably more likely to be standalone than something that's integrated. Right. I think you just have to wait to see over time what manifests itself out there. How does this feed into the objective to try to get to that double-digit growth that we've been striving to look for? How much is this product? How much is the attached subscription? How much does M&A play a part of getting to that objective? I think in, if you look at today, all the changes that we made to date with the sales force, our whole go-to-market management changes, this is all with that goal. I think any M&A, it would have to contribute to that in a very large way. Yeah. That's not key to us getting to double digit. I'm sure it would accelerate us getting there. Right. I think it's really about execution. We believe we have the right products for this marketplace. Now with the AI Network Firewall, I think it's even more true. It's just for us, it's purely about execution on the go-to-market side. That includes marketing and the sales. Is there any sort of envelope you are trying to work in when it comes to margins? Just with the, you are going to be entering 2027 with a much bigger sales force capacity. I would say, look, we have the annual operating plan going on right now. All of that will come from that planning. There are things that can contribute to both sides of it. I think we have to get through that planning and probably talk more about it as we go into the fourth quarter. Yeah. Then maybe just where to leave it just in terms of the refresh dynamic. Last year was a strong refresh dynamic. We are seeing others have strong refresh activity this year. Is Check Point on a, what is called off cycle, or is it on a different refresh cadence than some of the competitors out there do you think? I think traditionally we have always been. Yeah. I think there is about a one year apart. Yeah. I think next year could have, because of the AI dynamic and the capacity constraints people are probably dealing with within their networks, given what they want to do with AI. I think the potential for an accelerated refresh in the future is probably there. Also, the competitive aspect. Yeah. We have a different offering than our competitors do in the marketplace, so we'll have to see how that all plays out. Yeah. With the new go-to-market organization, I think we're going to try and approach this from every angle to accelerate our growth. Yeah. We hear good things about Maestro. I haven't heard you mention it in our time- Maestro- a lot. It's different. Maestro is a differentiator for us. Yeah. It's something that at the larger, the high end of the market, there's nothing like it. We don't get asked about it from Wall Street much, right? Yeah. We get asked about it from our customers quite a bit. Yeah. Because then it seems like it's well suited for maybe Neoclouds. It is. Is this something that maybe you're targeted with the named strategic accounts or the hunters? Is this an opportunity for you guys? I definitely think our whole solution from that aspect, from Maestro. If you're looking at large capacity networks, Yeah. it definitely is smack dab in the middle. Yeah. That is stating the obvious. Yeah. The technology is there, now you just got to go out and execute and a lot of feet on the street. That is it. Yeah. All right. Awesome. In a nutshell. We'll leave it there, Kip. Thank you. Thank you, sir.